TESCO’S loss-making Fresh & Easy chain in the United States is “fighting nicely” in a tough market, the chief executive of the retailer said yesterday, underlining his belief that the chain can have a profitable future.
Tesco boss Philip Clarke has this year rejected investor calls to withdraw from the US, though he told shareholders at their annual meeting in June he would pull the plug on the business if it continued to disappoint.
Speaking at the World Retail Congress (WRC) yesterday, Clarke gave the West Coast chain, which trades from nearly 200 stores, a renewed vote of confidence.
“The stores that we have continue to grow nicely and the reason it’s worth persisting is that the stores themselves fulfil a particular need for a particular group of customers,” he said.
“It’s only five years old, it’s playing in a play ground with some very big and very old retailers who are very wise and it’s fighting nicely.”
In April, Clarke said he did not expect Fresh & Easy to break even until its 2013-14 financial year, against a previous target of 2012-13.
Tesco, the world’s third-biggest retailer, has slowed its expansion plans for Fresh & Easy and though the chain’s underlying sales growth slowed to 3.6 per cent in its fiscal first quarter from 12.3 percent in the fourth quarter of the previous financial year, the CEO said operational improvements, such as new product ranges, were having an impact.
“Already the changes that we’ve been making have gone some way to prove that’s there’s life in Fresh & Easy yet,” he said.
“We’ll continue to hopefully see those sales grow and it move towards profitability.”
Tesco will report first-half results on 3 October. Its shares closed 0.15 per cent lower at 343.45p.
City A.M. Reporter